CHAPTER - 1 INDIAN REGULATORY FRAMEWORK
Q1. What is Law?
Sol. Law is a set of obligations and duties imposed by the government for securing welfare
and providing justice to society. India’s legal framework reflects the social, political,
economic, and cultural aspects of our vast and diversified country.
Q2. What is the Process of Making a Law
Sol. When a law is proposed in parliament it is called a Bill. After discussion and debate, the law
is passed in Lok Sabha. Thereafter, it has to be passed in Rajya Sabha. It then has to obtain the
assent of the President of India.
Finally, the law will be notified by the Government in the publication called the Official
Gazette of India. The law will become applicable from the date mentioned in the notification
as the effective date. Once it is notified and effective, it is called an Act of Parliament.
Q3. Types of laws in the Indian Legal System
Sol. The laws in the Indian legal system could be broadly classified as follows:
Criminal Law
Criminal law is concerned with laws pertaining to violations of the rule of law or public
wrongs and punishment of the same. Criminal Law is governed under the Indian Penal Code,
1860, and the Code of Criminal Procedure, 1973 (CRPC). The Indian Penal Code, 1860,
defines the crime, its nature, and punishments whereas the Criminal Procedure Code,
1973, defines exhaustive procedure for executing the punishments of the crimes.
Murder, rape, theft, fraud, cheating and assault are some examples of criminal offences under
the law.
Civil Law
Matters of disputes between individuals or organisations are dealt with under Civil Law. Civil
courts enforce the violation of certain rights and obligations through the institution of a civil
suit. Civil law primarily focuses on dispute resolution rather than punishment. The act of
process and the administration of civil law are governed by the Code of Civil Procedure, 1908
(CPC). Civil law can be further classified into Law of Contract, Family Law, Property Law, and
Law of Tort.
Some examples of civil offences are breach of contract, non-delivery of goods, non-payment
of dues to lender or seller defamation, breach of contract, and disputes between landlord and
tenant.
Common Law
A judicial precedent or a case law is common law. A judgment delivered by the Supreme
Court will be binding upon the courts within the territory of India under Article 141 of the
Indian Constitution.
1|Page
, The doctrine of Stare Decisis is the principle supporting common law. It is a Latin phrase that
means “to stand by that which is decided.” The doctrine of Stare Decisis reinforces the
obligation of courts to follow the same principle or judgement established by previous
decisions while ruling a case where the facts are similar or “on all four legs” with the earlier
decision.
Principles of Natural Justice
Natural justice, often known as Jus Natural deals with certain fundamental principles of
justice going beyond written law. Nemo judex in causa sua (Literally meaning “No one should
be made a judge in his own cause, and it’s a Rule against Prejudice), audi alteram partem
(Literally meaning “hear the other party or give the other party a fair hearing), and reasoned
decision are the rules of Natural Justice. A judgement can override or alter a common law,
but it cannot override or change the statute.
Q4. Write a short note on The Ministry of Finance.
Sol. The Ministry of Finance (Vitta Mantralaya) is a Ministry within the Government of India
concerned with the economy of India, serving as the Treasury of India. In particular, it
concerns itself with taxation, financial legislation, financial institutions, capital markets,
centre and state finances, and the Union Budget.
As a Chartered Accountant, many of your day-to-day work life will be impacted by this
ministry and its proclamations. This Ministry is so important that many ministers have
preferred to hold the portfolio of Finance Minister also.
One of the important functions of the Finance Ministry is the presentation of the Union
Budget. This annual event is eagerly awaited by professionals and the common man as it
provides for the rates of taxes and budget allocations for the ensuing year.
Q5. Write a short Note on The Securities and Exchange Board of India (SEBI)
Sol. The Securities and Exchange Board of India (SEBI):
is the regulatory body
for securities and commodity market in India
under the ownership of Ministry of Finance within the Government of India.
It was established on 12 April, 1988 as an executive body and was given statutory
powers on 30 January, 1992 through the SEBI Act, 1992.
Q6. Write a detailed note on Reserve Bank of India (RBI)
Sol. Reserve Bank of India:
is India’s Central Bank and regulatory body responsible for regulation of the Indian
banking system.
It is under the ownership of Ministry of Finance, Government of India.
It is responsible for the control, issue and maintaining supply of the Indian rupee.
It also manages the country’s main payment systems and works to promote its economic
development.
2|Page
, Bharatiya Reserve Bank Note Mudran (BRBNM) is a specialised division of RBI through
which it prints and mints Indian currency notes (INR) in two of its currency printing presses
located in Nashik (Western India) and Dewas (Central India).
RBI established the National Payments Corporation of India as one of its specialised division
to regulate the payment and settlement systems in India.
Deposit Insurance and Credit Guarantee Corporation was established by RBI as one of its
specialized division for the purpose of providing insurance of deposits and guaranteeing of
credit facilities to all Indian banks.
Q7. Explain the Structure of the Indian Judicial System.
Sol.
(i) Supreme Court: The Supreme Court is the apex body of the judiciary. It was established
on 26th January, 1950. The Chief Justice of India is the highest authority appointed under
Article 126.
The principal bench of the Supreme Court consists of seven members including the Chief
Justice of India. Presently, the number has increased to 34 including the Chief Justice of
India due to the rise in the number of cases and workload. An individual can seek relief in
the Supreme Court by filing a writ petition under Article 32.
(ii) High Court: The highest court of appeal in each state and union territory is the High
Court. Article 214 of the Indian Constitution states that there must be a High Court in each
state.
The High Court has appellant, original jurisdiction, and Supervisory jurisdiction. However,
Article 227 of the Indian Constitution limits a High Court’s supervisory power. In India,
there are twenty-five High Courts, one for each state and union territory, and one for each
state and union territory.
Six states share a single High Court. An individual can seek remedies against violation of
fundamental rights in High Court by filing a writ under Article 226.
(iii) District Court: Below the High Courts are the District Courts. The Courts of District Judge
deal with Civil law matters i.e. contractual disputes and claims for damages etc., The Courts
of Sessions deals with Criminal matters.
Under pecuniary jurisdiction, a civil judge can try suits valuing not more than Rupees two
crore.
Jurisdiction means the power to control. Courts get territorial Jurisdiction based on the
areas covered by them. Cases are decided based on the local limits within which the parties
reside or the property under dispute is situated.
(iv) Metropolitan courts: Metropolitan courts are established in metropolitan cities in
consultation with the High Court where the population is ten lakh or more.
Chief Metropolitan Magistrate has powers as Chief Judicial Magistrate and Metropolitan
Magistrate has powers as the Court of a Magistrate of the first class.
3|Page
, CHAPTER 2 - THE INDIAN CONTRACT ACT, 1872
Q1. All contracts are agreements, but all agreements are not contracts”. Comment.
Sol. An agreement comes into existence when one party makes a proposal or offer to the other
party and that other party gives his acceptance to it.
A contract is an agreement enforceable by law. It means that to become a contract an
agreement must give rise to a legal obligation i.e. duty enforceable by law.
If an agreement is incapable of creating a duty enforceable by law, it is not a contract.
There can be agreements which are not enforceable by law, such as social, moral or religious
agreements.
The agreement is a wider term than the contract. All agreements need not necessarily become
contracts but all contracts shall always be agreements.
All agreements are not contracts: When there is an agreement between the parties and they
do not intend to create a legal relationship, it is not a contract.
All contracts are agreements: For a contract there must be two things
(a) an agreement and (b) enforceability by law.
Thus, existence of an agreement is a pre- requisite existence of a contract. Therefore, it
is true to say that all contracts are agreements.
Thus, we can say that there can be an agreement without it becoming a contract, but
we can’t have a contract without an agreement.
Q2. A sends an offer to B to sell his second- car for Rs. 1,40,000 with a condition that if B does
not reply within a week, he (A) shall treat the offer as accepted. Is A correct in his
proposition?
Sol. Provision
Acceptance to an offer cannot be implied merely from the silence of the offeree, even if it is
expressly stated in the offer itself. Unless the offeree has by his previous conduct indicated
that his silence amount to acceptance, it cannot be taken as valid acceptance.
Analysis and conclusion
So, in the given problem, if B remains silent, it does not amount to acceptance.
The acceptance must be made within the time limit prescribed by the offer. The acceptance
of an offer after the time prescribed by the offer or has elapsed will not avail to turn the offer
into a contract.
Q3. Explain the type of contracts in the following agreements under the Indian Contract
Act,1872:
Page | 1
Q1. What is Law?
Sol. Law is a set of obligations and duties imposed by the government for securing welfare
and providing justice to society. India’s legal framework reflects the social, political,
economic, and cultural aspects of our vast and diversified country.
Q2. What is the Process of Making a Law
Sol. When a law is proposed in parliament it is called a Bill. After discussion and debate, the law
is passed in Lok Sabha. Thereafter, it has to be passed in Rajya Sabha. It then has to obtain the
assent of the President of India.
Finally, the law will be notified by the Government in the publication called the Official
Gazette of India. The law will become applicable from the date mentioned in the notification
as the effective date. Once it is notified and effective, it is called an Act of Parliament.
Q3. Types of laws in the Indian Legal System
Sol. The laws in the Indian legal system could be broadly classified as follows:
Criminal Law
Criminal law is concerned with laws pertaining to violations of the rule of law or public
wrongs and punishment of the same. Criminal Law is governed under the Indian Penal Code,
1860, and the Code of Criminal Procedure, 1973 (CRPC). The Indian Penal Code, 1860,
defines the crime, its nature, and punishments whereas the Criminal Procedure Code,
1973, defines exhaustive procedure for executing the punishments of the crimes.
Murder, rape, theft, fraud, cheating and assault are some examples of criminal offences under
the law.
Civil Law
Matters of disputes between individuals or organisations are dealt with under Civil Law. Civil
courts enforce the violation of certain rights and obligations through the institution of a civil
suit. Civil law primarily focuses on dispute resolution rather than punishment. The act of
process and the administration of civil law are governed by the Code of Civil Procedure, 1908
(CPC). Civil law can be further classified into Law of Contract, Family Law, Property Law, and
Law of Tort.
Some examples of civil offences are breach of contract, non-delivery of goods, non-payment
of dues to lender or seller defamation, breach of contract, and disputes between landlord and
tenant.
Common Law
A judicial precedent or a case law is common law. A judgment delivered by the Supreme
Court will be binding upon the courts within the territory of India under Article 141 of the
Indian Constitution.
1|Page
, The doctrine of Stare Decisis is the principle supporting common law. It is a Latin phrase that
means “to stand by that which is decided.” The doctrine of Stare Decisis reinforces the
obligation of courts to follow the same principle or judgement established by previous
decisions while ruling a case where the facts are similar or “on all four legs” with the earlier
decision.
Principles of Natural Justice
Natural justice, often known as Jus Natural deals with certain fundamental principles of
justice going beyond written law. Nemo judex in causa sua (Literally meaning “No one should
be made a judge in his own cause, and it’s a Rule against Prejudice), audi alteram partem
(Literally meaning “hear the other party or give the other party a fair hearing), and reasoned
decision are the rules of Natural Justice. A judgement can override or alter a common law,
but it cannot override or change the statute.
Q4. Write a short note on The Ministry of Finance.
Sol. The Ministry of Finance (Vitta Mantralaya) is a Ministry within the Government of India
concerned with the economy of India, serving as the Treasury of India. In particular, it
concerns itself with taxation, financial legislation, financial institutions, capital markets,
centre and state finances, and the Union Budget.
As a Chartered Accountant, many of your day-to-day work life will be impacted by this
ministry and its proclamations. This Ministry is so important that many ministers have
preferred to hold the portfolio of Finance Minister also.
One of the important functions of the Finance Ministry is the presentation of the Union
Budget. This annual event is eagerly awaited by professionals and the common man as it
provides for the rates of taxes and budget allocations for the ensuing year.
Q5. Write a short Note on The Securities and Exchange Board of India (SEBI)
Sol. The Securities and Exchange Board of India (SEBI):
is the regulatory body
for securities and commodity market in India
under the ownership of Ministry of Finance within the Government of India.
It was established on 12 April, 1988 as an executive body and was given statutory
powers on 30 January, 1992 through the SEBI Act, 1992.
Q6. Write a detailed note on Reserve Bank of India (RBI)
Sol. Reserve Bank of India:
is India’s Central Bank and regulatory body responsible for regulation of the Indian
banking system.
It is under the ownership of Ministry of Finance, Government of India.
It is responsible for the control, issue and maintaining supply of the Indian rupee.
It also manages the country’s main payment systems and works to promote its economic
development.
2|Page
, Bharatiya Reserve Bank Note Mudran (BRBNM) is a specialised division of RBI through
which it prints and mints Indian currency notes (INR) in two of its currency printing presses
located in Nashik (Western India) and Dewas (Central India).
RBI established the National Payments Corporation of India as one of its specialised division
to regulate the payment and settlement systems in India.
Deposit Insurance and Credit Guarantee Corporation was established by RBI as one of its
specialized division for the purpose of providing insurance of deposits and guaranteeing of
credit facilities to all Indian banks.
Q7. Explain the Structure of the Indian Judicial System.
Sol.
(i) Supreme Court: The Supreme Court is the apex body of the judiciary. It was established
on 26th January, 1950. The Chief Justice of India is the highest authority appointed under
Article 126.
The principal bench of the Supreme Court consists of seven members including the Chief
Justice of India. Presently, the number has increased to 34 including the Chief Justice of
India due to the rise in the number of cases and workload. An individual can seek relief in
the Supreme Court by filing a writ petition under Article 32.
(ii) High Court: The highest court of appeal in each state and union territory is the High
Court. Article 214 of the Indian Constitution states that there must be a High Court in each
state.
The High Court has appellant, original jurisdiction, and Supervisory jurisdiction. However,
Article 227 of the Indian Constitution limits a High Court’s supervisory power. In India,
there are twenty-five High Courts, one for each state and union territory, and one for each
state and union territory.
Six states share a single High Court. An individual can seek remedies against violation of
fundamental rights in High Court by filing a writ under Article 226.
(iii) District Court: Below the High Courts are the District Courts. The Courts of District Judge
deal with Civil law matters i.e. contractual disputes and claims for damages etc., The Courts
of Sessions deals with Criminal matters.
Under pecuniary jurisdiction, a civil judge can try suits valuing not more than Rupees two
crore.
Jurisdiction means the power to control. Courts get territorial Jurisdiction based on the
areas covered by them. Cases are decided based on the local limits within which the parties
reside or the property under dispute is situated.
(iv) Metropolitan courts: Metropolitan courts are established in metropolitan cities in
consultation with the High Court where the population is ten lakh or more.
Chief Metropolitan Magistrate has powers as Chief Judicial Magistrate and Metropolitan
Magistrate has powers as the Court of a Magistrate of the first class.
3|Page
, CHAPTER 2 - THE INDIAN CONTRACT ACT, 1872
Q1. All contracts are agreements, but all agreements are not contracts”. Comment.
Sol. An agreement comes into existence when one party makes a proposal or offer to the other
party and that other party gives his acceptance to it.
A contract is an agreement enforceable by law. It means that to become a contract an
agreement must give rise to a legal obligation i.e. duty enforceable by law.
If an agreement is incapable of creating a duty enforceable by law, it is not a contract.
There can be agreements which are not enforceable by law, such as social, moral or religious
agreements.
The agreement is a wider term than the contract. All agreements need not necessarily become
contracts but all contracts shall always be agreements.
All agreements are not contracts: When there is an agreement between the parties and they
do not intend to create a legal relationship, it is not a contract.
All contracts are agreements: For a contract there must be two things
(a) an agreement and (b) enforceability by law.
Thus, existence of an agreement is a pre- requisite existence of a contract. Therefore, it
is true to say that all contracts are agreements.
Thus, we can say that there can be an agreement without it becoming a contract, but
we can’t have a contract without an agreement.
Q2. A sends an offer to B to sell his second- car for Rs. 1,40,000 with a condition that if B does
not reply within a week, he (A) shall treat the offer as accepted. Is A correct in his
proposition?
Sol. Provision
Acceptance to an offer cannot be implied merely from the silence of the offeree, even if it is
expressly stated in the offer itself. Unless the offeree has by his previous conduct indicated
that his silence amount to acceptance, it cannot be taken as valid acceptance.
Analysis and conclusion
So, in the given problem, if B remains silent, it does not amount to acceptance.
The acceptance must be made within the time limit prescribed by the offer. The acceptance
of an offer after the time prescribed by the offer or has elapsed will not avail to turn the offer
into a contract.
Q3. Explain the type of contracts in the following agreements under the Indian Contract
Act,1872:
Page | 1
